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Former Minister for Trade

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Press Conference - World Economic Forum in Davos

Simon Crean: Trade Ministers had a very good discussion today. There's no
doubt that the global financial crisis has had a huge impact on
trade flows. But the important thing coming from the meeting is
the very strong view is that trade is not part of the problem,
trade is part of the solution. Trade is a stimulus. It's a
stimulus because it has a multiplier effect on domestic
activity. So in the context of the global economy being called
upon to coordinate its fiscal stimulus then we are very
strongly of the view that the impact of that fiscal stimulus
will be diminished unless we also conclude the Doha Round.

The G20 called on Trade Ministers to meet last December to
work towards concluding the Round. That didn't happen. But what
has emerged from today is a new resolve to find a mechanism,
before the G20, to have input to the G20 meeting. To have an
input that reinforces the stimulus factor in trade to reinforce
the multiplier effect. We also see some other very worrying
trends. We've talked about the call by the G20 Leaders not to
revert to protectionism but we have seen signs of very worrying
trends as part of the so-called fiscal domestic stimuluses that
result in trade distorting activities. The EC and
dairy I raised, as well as the Buy America campaign. So
concluding the Doha Round isn't just important to be part of
the stimulus mechanism, it's also fundamental to ensuring that
the call to stop the reversion to protectionism actually
eventuates.

The other dimension that we had a long discussion about
today was the tradefinance issues because clearly the other
impact of the global financial crisis is in turn having an
impact on some restrictions in certain countries to access
trade finance. Now trade finance is one of the least risk
activities in the world yet it's caught up in the overall
liquidity aspects. We need to continue to monitor that and we
need to, importantly, inject into the discussions about
solutions to global liquidity issues, the specific dimension of
trade finance. So the purpose of the meeting, which I think was
a really good outcome in the end, was to not just call for the
conclusion to Doha in its own right, but to understand the
fundamental importance of concluding Doha to enhancing the
stimulus packages and to doing a better job at stopping the
reversions to protectionism that are starting to emerge.

Tasker: Was there a bigger sense of urgency to
conclude Doha and was there any mention of a timetable?

Crean: There's obviously a sense of urgency. But
there's also the realisation that we have an important event
that is going to be significant in shaping the move forward,
and that is the further meeting of the G20 on April the second.
We need to have input into that. It can't just be just Finance
Minsters injecting into that equation, it also has to be Trade
Ministers and Pascal Lamy has had very productive discussions
with Gordon Brown, where Gordon Brown wants the WTO and the
Trade Ministers to have that input.

The issue for us is engagement with the new Obama
Administration and how quickly we can do that, given their
confirmation processes. So, whilst we haven't set a specific
time for another meeting there is a very strong view that what
we need to do, if we can, is have that meeting in advance of
the G20 meeting in April.

Murray: What did the US say about steel?

Crean: Interestingly, we raised this issue and were
assured by the USTR that they are actively looking at the
proposals that have come from the Congress as to their WTO
compliance. They also accept that this sends some ... that they
can understand why we are arguing so strongly it sends a wrong
signal. Now, there have been some encouraging signs emerge over
night about the White House's view about this. We've registered
our concerns, they've clearly resonated and we're hopeful that
common sense will prevail in relation to it.

Tasker: And on dairy subsidies [inaudible]?

Crean: Yes. Very strong discussion with Catherine
Ashton. We are going to continue to discuss the detail and the
implications of this with the EC. We've registered very
strongly our concern, not that they aren't WTO compliant they
can argue that till the cows come home, so to speak, given it's
a dairy export subsidy, but the truth is it sends the wrong
signal and this point was underscored in our discussions today.
And I think what both of these examples highlight is what's
going to happen if we don't conclude the Doha Round. It's not
just that you lose the stimulus impact, you go backwards. You
do go back to things that might be legal on the face of them,
but are against the spirit of where we're trying to head. So,
if we're of a view, collectively about how to go forward we
have to use every opportunity to put peer pressure on countries
under the name of fiscal stimulus or domestic support or
whatever that what they're not doing is doing a reversionary
factor on what has seen and been a major contributor to world
economic activity over the last few decades.

Tasker: So you're still hopeful that it can be
concluded?

Crean: The Round? I am always hopeful that the Round
can be concluded. What will ensure it's not concluded is when
we drop the ball in terms of persisting and energizing the
opportunities to advance it but what came from today's
discussion was a very clear desire to move forward and a very
strong signal that in gauging the process to try and conclude
the Round we have to move forward from where we got in July,
not going back to renegotiate it, and whilst that's not a
formal position, the working assumption is that we start from
the texts that emerged, developed out of July, and emerged
following the G20 Leaders meeting. They themselves have been an
advance. You've heard me talk on previous occasions
of the fact that we're eighty percent there. We have to bridge
the other twenty percent. The new texts in December have gone
some of the way to bridging that other twenty percent. We've
got to keep up that work program but we can only do that if the
working assumption is we proceed forward, and that was a very
clear signal again out of today's meeting.

Crean: Well, we obviously welcome that announcement
by Japan because it's a very early indication by an important
country and aid contributor in response to the IMF call the
other day that as part of the global response we shouldn't be
moving backwards on aid. Aid for trade is a vital ingredient.
The two dimensions of trade are firstly opening up markets for
the stimulus and the multiplier effect. The second is ensuring
that countries are competitive enough and productive enough to
take advantage of the market opportunities so that they can
actually compete. That won't happen unless we are committed to
putting money into aid programs that help that competitiveness
and help that productive activity. Money into infrastructure,
into skills development, into innovation and the like. So we
welcome the Japanese program. We have indicated in our first
budget last year when we got in, the commitment to lift the
proportion of aid from GDP and we will continue to play a very
strong role in that regard.

Tasker: Just one more thing on South Korea, the free
trade agreement?

Crean: Yes, we've had discussions with my counterpart
we are at the point, both countries, of taking the next steps
to formally approve proceeding to negotiate the FTA. We're
aiming for discussions at Ministerial and hopefully Head of
Government level over the next couple of months but this too
has been a very important development here today that in the
midst of all the problems of stalled trade talks etc we are
seeing a commitment with one of our strongest trading partners
to advance the bilateral arrangement.

Murray: Just finally, the IMF has said that Australia
is heading towards recession, this really puts even more
pressure on the government to get its stimulus package right,
to get all these other measures right?

Crean: Well I think .. I haven't seen the figures,
but there's no doubt that the global downtown is more severe
than had previously been forecast we've been hearing that all
week here. That will impact upon Australia. All of the other
fundamentals, so far as Australia is concerned are in good
shape, strong budget surpluses, strong employment growth up
until now, strong trade surpluses, healthy banking system. Our
problem is that we, like everyone else, are being impacted by
the global downturn. So therefore, whilst we have to take steps
domestically to stimulate domestic economic activity, we have
to be part of the global solution, and that's what I've been
here for this week. It's not only going to benefit the
Australian economy, it will benefit the global economy. That
until we understand the fundamental importance of trade being
part of the stimulus, not just a marginal issue that's out
there, and it would be nice to have Doha concluded, the better
for global recovery. Trade is not part of the problem. Whatever
the other problems are, trade isn't part of it. But trade is
being impacted. More importantly, trade can be a vital part of
the solution, and that's what we've been on about this
week.